FD interest is fully taxable as "income from other sources" at your slab rate. Banks deduct TDS above certain limits, but TDS is not the final tax.
Key takeaways
- Interest is taxable every year on accrual, even in cumulative FDs.
- TDS at 10% applies when interest from one bank exceeds ₹50,000 in a year (₹1 lakh for senior citizens); 20% if PAN is not provided.
- Submit Form 15G (below 60) or Form 15H (60+) if your total income is below the taxable limit.
- Senior citizens can claim up to ₹50,000 deduction on deposit interest (Section 80TTB) under the old regime.
Tax calculation example
| Detail | Amount |
|---|---|
| FD interest in the year | ₹80,000 |
| TDS at 10% | ₹8,000 |
| Your slab | 30% |
| Tax due | ₹24,000 + cess |
| Balance to pay | ₹16,000 + cess (via advance/self-assessment tax) |
Forms 15G and 15H
| Form | Who | Condition |
|---|---|---|
| 15G | Individuals below 60, HUFs | Total income below exemption limit |
| 15H | 60 and above | Tax on total income is nil |
Submit at the start of each financial year to every bank.
Tax-saving FDs
5-year tax-saving FDs qualify for deduction up to ₹1.5 lakh under the old regime (Section 80C / 123), but the interest remains taxable.
Tips
- Check Form 26AS / AIS for TDS credits.
- Declare FD interest even if TDS was not deducted.
- Compare post-tax returns with PPF, debt funds and other options.
Your action checklist
- Compare rates for the exact tenure you need across 3–4 banks.
- Decide between cumulative and payout options based on cash needs.
- Stay within ₹5 lakh per bank for full DICGC cover.
- Submit Form 15G/15H at the start of the financial year if eligible.
- Give clear maturity instructions — renew, pay out or ladder.
FAQs
Is cumulative FD interest taxed only at maturity?
No — it should be declared on accrual each year.
Can I claim a refund if too much TDS is deducted?
Yes, through your income-tax return.
